Strategic Operations Issues

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STRATEGIC OPERATIONS ISSUES

Elizabeth Kelly

ABSTRACT

This paper identifies an operational issue of a national food-chain. The problem is identified with the demonstration of the functional relationships and process flow analysis. With the use of concepts of operations and process management, the problem is analyzed and methods sought to provide recommendations and an implementation plan.

TABLE OF CONTENTS

Background of Hi-Lo Food Stores………………………………..5

Problem Identification…….………………………………………5

Background of the LINX Operating System………………………6

Analysis using Concepts……………………………………………7

Recommendation and Implementation Plan………………………..9

References…………………………………………………………..11

BACKGROUND OF HI-LO FOOD STORES

Hi-Lo Food Stores is a supermarket chain operating in Trinidad since 1950. With 17 outlets spread throughout the length and breadth of the country, Hi-Lo Food Stores employs over 1800 employees.

PROBLEM IDENTIFICATION

At Hi-Lo Food Stores, which is considered a mass service process type (Slack et al, pg. 114) customers are afforded the option of different payment methods. Payment methods include cash, credit cards and debit cards. In an effort to continue to provide better options for settling of payments to merchants and customers alike, the company Infolink was formed. Infolink is a joint venture company owned by the four commercial banks of Trinidad and Tobago whose focus is to provide state of the art financial transaction-switching technology by way of debit card payment.

In recent times, it has been observed that on peak commercial periods, Hi-Lo Food Stores terminals have not been able to process debit card payments. The message ‘No Communication Field’ is generated when debit card transactions cannot be processed. The customer is either forced to use a credit card or use cash. The nature of the business of Hi-Lo Food Stores would in some instances cause for a large sum of money at the check-out terminal. Customers, who do not have a credit card facility available, are then forced to leave their merchandise at the store and locate an Automated Banking Machine (ABM) to withdraw cash and then return to the store to complete the transaction.

Hi-Lo Food Stores is then faced with the issue of storing in a secure manner those items selected and already bagged for the prospective customer and can only be delivered until payment is tendered. This then causes a storage issue since these items are usually placed at the terminal the customer was accommodated at. Sub-issues of pilfering and bottlenecking of check-out counters have also been evident.

The second issue arises when the customer does not return for reasons such as, no ABM facility within range of Hi-Lo, and then causes the customer to leave to a more convenient supermarket. This leaves Hi-Lo with spoilage and re-stocking of the items already held at the terminals. Customer dissatisfaction sets in and an erosion of brand loyalty occurs.

The impact on Hi-Lo Food Stores can then be summarized to include increased check-out times at terminals, customer dissatisfaction and decreased sales.

BACKGROUND OF THE LINX OPERATING SYSTEM

In 1992 saw the advent of the LINX shopping experience to Trinidad and Tobago. Infolink Services Limited is the facilitator of the LINX Network where debit cards from any commercial bank in Trinidad and Tobago would be processed at all Automated Banking Machines (ABMs) regardless of the commercial bank the customer so belonged. This system led the way for merchants to employ the LINX Network at their Point-of-Sale terminals thus allowing debit cards issued at any commercial bank in Infolink’s Accredited Partners to be accepted at these participating merchants.

While the LINX system proved seamless during its pilot project phase of operations, in recent times as the service became more widely accepted by the general public, LINX seemed to be unable to manage the...
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